Facebook Working on Location-Based Mobile-Ad Product

June 18 (Bloomberg) -- Facebook Inc., owner the world’s
largest social network, says it’s working on a location-based
mobile-advertising product that will allow companies to target
users with real-time data showing their whereabouts.

“Phones can be location-specific so you can start to
imagine what the product evolution might look like over time,
particularly for retailers,” Carolyn Everson, Facebook’s vice
president of global marketing solutions, said in a telephone
interview. “We’ve had offers being tested over the last couple
of months.”

Facebook, whose shares fell 17 percent from its initial
public offering last month, is increasing mobile-ad efforts amid
concern ad revenue isn’t keeping pace with users’ migration to
smartphones. U.S. mobile-ad spending is expected to grow 80
percent to $2.61 billion this year from 2011, when Google Inc.
received half of such ad dollars, according to EMarketer Inc.

“The holy grail of advertising is finding people when they
are at their closest point to making a purchase,” said Colin
Sebastian, an analyst with Robert W. Baird & Co. in San
Francisco, who rates Facebook outperform.

“Having some location-based element to advertising can be
very powerful, and if you combine that with all the personal
data Facebook has, the potential is enormous.”

Mobile-Ad Testing

Facebook, based in Menlo Park, California, has been testing
new ad products and showed almost a dozen ideas in April to a
client council of corporate chief marketing officers and agency
executives, Everson said. Currently, mobile advertising appears
in the form of stories in a news feed, where users also find
updates from friends like new pictures or relationship status.
Facebook’s offers are available on both mobile and desktop
versions of the site.

While Facebook hasn’t said when it may roll out a location-based ad product, such ads could take advantage of information
shared by almost 1 billion people that use the site.

Facebook, which already allows companies to serve ads based
on ZIP code, has come under scrutiny from regulators in the past
about how it uses data in advertising. A mobile product could
use more specific, real-time data. The company also allows users
to share a physical location when posting an update.

“It’s more challenging to get that advertising and have it
be accurately targeted at the user, and to do so in a way that
doesn’t make the consumer uncomfortable,” said Noah Elkin, a
mobile-advertising analyst for EMarketer.

Mobile-ads accounted for 1 percent of all ad spending in
2011, according to EMarketer.